Discussion:
On December 31, 2011, Walden owned the following securities that are held as a long-term investment. The securities are not held for influence or control of the investee.
Common Stock Shares Cost
X Co. 2,000 $90,000
Y Co. 5,000 45,000
Z Co. 1,500 30,000
On this date, the total fair value of the securities was equal to its cost. In 2012, the following transactions occurred:
July 1 Received $1 per share semiannual cash dividend on Y Co. Common Stock.
8 Received 4,000 shares of X Co. Common Stock in a 3 for 1 stock split.
Required
(a) Journalize the two transactions above. If no journal entry is required put N/A next to the date.
July 1
July 8
(b) Assuming at December 31, 2011 (Ignore 2012 activity) the fair values per share of the common stocks were: X Co. $10, Y Co. $8, and Z Co. $5prepare the adjusting entry to show the securities at fair value assuming they are classified as "available-for-sale securities".
(c) Indicate where any unrealized gain/loss would be reported (Income Statement or Balance Sheet?).